The Gap is looking to bridge the generation gap, appeal to multiple age groups

Welcome to Stock Takes, my thrice-monthly take on an individual stock. I look at the big picture, unlike Wall Street analysts who are geared to earnings, and the media that focuses more on news value.

Photo by Alex Bierwagen on Unsplash

Manufacturers of apparel, footwear and other products that have largely outsourced their production to China, Vietnam, Indonesia, India and other low-cost Asian countries are expected to take a hit from the Trump tariffs, although the president’s see-sawing stance means that the exact impact is not yet clear. The Gap, Inc. (NYSE:GAP) is one such company. The apparel retailer – with its well-known brands such as Gap, Old Navy, Banana Republic and Athleta – has been remaking itself and striving to stay relevant to consumers after going through a sales slowdown for some time. Recently its sales have been picking up and the company is looking to build on that momentum and further develop its brands.

The Gap saw a pickup in comparable sales for its brands last year, for the first time in seven years, after bringing in Richard Dickson as Chief Executive Officer of the company in 2023. Dickson was formerly Chief Operating Officer of Mattel and has been credited for improving the image of that brand’s Barbie doll franchise with successful marketing. Among the steps Dickson has taken at The Gap is the hiring of Zac Posen as creative director. Posen has been aiming to make The Gap brands relevant again and appeal to a younger demographic, among other design approaches.

Some of the factors that Dickson has cited that led to The Gap’s decline include a lack of focus with too much overlap among its different brands, which led to cannibalization of sales among the brands. According to Dickson, the company had also engaged in product launches while the stores themselves were not improved.

There were also issues relating to faulty production. For instance, Banana Republic came out with blazers in 2025 whose armholes were not big enough for average-size women. And in 2022, Old Navy’s attempt to widen its plus-size offerings for women was not successful either, leading to the exit of Sonia Syngal who was at the helm of the company at that time.

Dickson is focusing on the details, trying to distinguish each brand from the others, and paying attention to indicators from social media such as Tik Tok about how much a brand’s initiatives are catching on. The Gap CEO is also looking to communicate more frequently with employees, who have endured a string of CEOs in recent years, and make them feel more included. He also wants to be more honest about what went wrong at the company and elicits feedback from subordinates. He sees more clarity about the company’s prices and its story and says that while the company has more work to do, it is now in the race.

As for The Gap stock, it has underperformed the S&P 500 during the last few years, with an investment of $100 in the company in February 2020 turning in an about 62% return by the beginning of this year, compared to a return of about 102% on the same $100 investment in the S&P 500 and about 84% for the same investment in the Dow Jones U.S. Apparel Retailers Index. On April 25, the stock closed at about $21, after starting the year at about $23, and it has seen a few dips in this year’s volatile market environment.

The Gap, founded in 1969 by Donald Fisher and Doris Fisher in California, went public in 1976 at $18 per share ($0.11 on a split-adjusted basis) and has rewarded shareholders with nine stock splits since then, along with dividend payments. The company owned and operated more than 2,500 stores in the U.S., Canada, Japan and Taiwan as of early 2025. Is the company’s ongoing turnaround a good opportunity to buy this apparel maker’s stock, or is it likely to lose out if it has to deal with challenges such as a tough tariff environment?